It’s a big moment for parents: President Joe Biden announced this week that, effective July 15, the IRS would be issuing child tax credits on a monthly basis to eligible families as part of the American Rescue Plan, which aims to help restart the economy after the impact of COVID-19. But who exactly is eligible? And how much can you expect to receive? We’ve got answers to all your questions here.
1. Who qualifies for the tax credit?
If you have a child under the age of 18, you could be eligible to receive a monthly child tax credit. But, depending on how much you make and your tax filing status (single, joint or head of household), your total amount will vary.
Right now, the monthly child tax credit looks like this:
• If you’re a single filer with an adjusted gross income of $75,000 or less, you are eligible to receive the full credit. If your income falls between $75,000 and $147,000 (for children under 6 years old) and $75,000 and $135,000 (for children between 6 and 17), you are eligible for a partial benefit.
• If you’re a married couple filing jointly, the cap is $150,000 to receive the full credit. If you’re adjusted gross income falls between $150,000 and $222,000 (for children under 6 years old) and $150,000 and $210,000 (for children between 6 and 17), you are eligible for a partial benefit.
• If you’re a head-of-household filer, you have to make less than $112,500 to receive the maximum benefit. If you’re income is between $112,500 and $184,500 (for children under 6 years old) and $112,500 and $172,500 (for children between 6 and 17), you are eligible for a partial benefit.
2. How much am I eligible to receive?
Eligible families will receive up to $300 per month for each child under 6 years old and up to $250 per month for each child who is 6 years old and above. The maximum amount that families will receive annually is $3,600 per child under 6 years old and $3,000 per child between the age of 6 and 17. This means that a joint filer with two kids under the age of 6 could receive $7,200 in payments through next spring as long as their income meets the requirements. A single filer with three kids? You could receive up to $10,800 depending on age and income brackets.
To calculate the exact amount you’re eligible for, you can use an online child tax credit calculator.
3. How do I collect my credit?
Just like with the earlier stimulus checks, payments will be based on your 2020 tax return. If that hasn’t been filed yet, the IRS will use your 2019 tax returns for address and direct deposit information. (They’ll also send out paper checks and debit cards if you didn’t use direct deposit.)
If you didn’t file taxes or you simply want to update what’s on file, the IRS is setting up a couple of online portals that you can use to enter your family and income information. (You can also use these portals to opt out of the monthly payments, which we explain in more detail below.)
4. When can I expect to receive each payment and for how long?
The payments will begin going out on July 15 and will be made on the 15th of each month thereafter, unless the date falls on a weekend or holiday, according to the Treasury Department.
As of right now, the payments will cover July to December 2021. (If you’re eligible for the maximum amount, you’ll receive the remainder in early 2022.)
5. Is there any benefit to opting out of the monthly payments?
It depends on your financial situation. Right now, there are two ways to receive the credit: You can either be paid a lump sum that gets distributed when you file your 2021 tax return or you can get sent six monthly payments in advance, which will go out between July and December with the remainder paid out to you in 2022.
On the online portal, you can indicate your preference for how you receive the payment. But if you prefer to start receiving payments in July, families with a child younger than 6 years old, for example, could receive $1,800 ($300 a month) over the course of six months with the remainder ($1,800) being paid out next year or you could just opt to receive the full $3,600 in 2022. If you don’t update your preferences, the default is that you will receive monthly payments.
RELATED: Being a Working Mom Was Always Hard, but Now the ‘Triple Burden’ Is Making It Even Harder